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New AMA study shows that most health insurance markets are dominated by one or two health insurers

Health insurance is expensive in the U.S.  Most American families who get insurance through their job pay around one in five (15-25%) of their healthcare dollars to an insurance company.  One reason for the high cost of health insurance may be lack of competition. The study found that “the vast majority of commercial health insurance markets in the United States are dominated by one or two health insurers” and these insurance companies do not have to compete with low cost government-sponsored insurance plans.  The study authors found that “99% of health insurance markets in the U.S. are highly concentrated…In 48% of metropolitan statistical areas, at least one insurer had a market share of 50 percent or more”.

What does this mean for you?  For the foreseeable future Americans can expect to pay a lot for the privilege of having health insurance, and insurance company towers will continue to grow taller.  To reduce insurance overhead and bureaucracy in America experts suggest that competition can help, but there must be a level playing field.  Efforts to standardize and simplify health plan options through state insurance exchanges may be a good first step in that direction.  But experts suggest that further efforts will be needed to reduce insurance bureaucracy and overhead. Payment reform efforts that encourage responsible spending by the providers themselves may be more effective in reducing costs.  Besides, most people care more about having choice of good doctors and treatments than they do about being able to choose amongst dozens of high cost insurance companies.

Author: Jim Bailey